Stocks dropped after January’s consumer prices reading raised fears about inflation reigniting and caused interest rates to spike. SMCI up 10%; Nvidia fell 3%.

January’s consumer price index jumped 0.5% for the month, putting the annual inflation rate at 3%. Those figures were much higher than the respective Dow Jones estimates from economists for increases of 0.3% and 2.9%. Excluding volatile food and energy prices, core CPI rose 0.4% on the month and 3.3% for the past 12 months, both higher than expected.

The 10-year Treasury yield, a benchmark for mortgage rates and other lending, jumped above 4.6% following the data.

A broad sell-off ensued following the release of CPI with most of the S&P 500 indicated to open lower. Consumer shares at risk if rates spike like Home Depot declined, along with bank stocks that could be hurt if the economy slows under the weight of higher rates. Bull market leaders like Palantir were also in the red.

“The hotter than expected CPI confirms investors’ anxiety regarding too-hot inflation that will keep the Fed on the sidelines (as opposed to cutting rates),” Sameer Samana, Wells Fargo Investment Institute head of global equities and real assets, said. “We have been concerned about inflation as a risk for some time, and believe that while risk markets can go higher, it will be a choppier trajectory than the last two years.”

Following the jump in CPI, investors will likely be paying closer attention to the day two testimony from Federal Reserve Chair Jerome Powell’s before Congress. He speaks to the House Committee on Financial Services on Wednesday. Powell testified Tuesday to the Senate Banking Committee that the Fed was in no hurry to make further interest rate cuts. The latest data makes it less likely the Fed will resume its rate-cutting campaign anytime soon and now raises concern perhaps the next move could even be a hike.

President Donald Trump said Wednesday morning before the CPI data was released that interest rates should be lowered.